iPodDid Steve Jobs finally screw up? After all, if there was such a thing as the portable video business wouldn’t everyone would have been walking around with a Sony Watchman for the last 20 years? No and no.

Apple’s new video iPod probably won’t capture the imagination of consumers quite the way its audio predecessor did, but that may have as much to do with the company’s “all Apple, all the time” press office as it does with the features and benefits of the product itself. (Steve, I appreciate how much stuff you guys are putting out, but take a lesson from best practices public relations management – a little mystery … please!)

Whether consumers will ultimately decide they love Video iPods is not the subject, we’ll just wait and see. The really interesting thing about the Video iPod is the video! Open iTunes click on Videos and you get a blank screen. No wait, click on Music Store then click on TV Shows, now you can see some video offerings. OK, they didn’t get this exactly right, but they will.

Once you’re there you can download a bunch of different ABC Television Network Shows, some Pixar stuff, more than enough content for a live “proof of concept” test. I chose to spend my $1.99 on the season premiere of “Desperate Housewives.” I didn’t really need it, I have an HD version stored on my HD-DVR and the form factor of the show is best experienced on a 16×9 HD screen. The story is portability here and for $1.99 I simply could not resist.

Two clicks and my first-ever legal, commercial-less, video of a network show was downloading to my Mac G5 with the really big LCD monitor. The file downloaded quickly (for a 40ish minute video). I have a 3meg connection your actual download time will vary. I ended up with a 208MB .m4v file.

One more click and I was watching the show in a small window that looked pretty good. Control-click and I’m watching the show full screen on my 23 inch HD Cinema Display. Ouch! The picture is not compressed or encoded to be viewed on a big screen. It’s about the quality of a bad VHS tape. OK. I walked into my youngest son’s room and there he was watching a music video ½ screen on his 19” LCD monitor (another $1.99). He was just about to download another one when he said to me, “… this picture sucks!”

I headed back to my Mac with a mission. Watching television on my computer is not emotionally satisfying and this is obviously not the business model; the key to the iPod culture is portability. Only, I don’t have a video iPod. Easy fix, I’ll buy one. Wait a minute, I already have a 60GB iPod Photo, two 1GMB iPod Shuffles, 1 512MB Shuffle with a Diet Coke logo on it (thanks, Coke people it was a cool gift) a new iPod Nano (that’s already really scratched up) and four old big 10GB and 20GB models that still work, but don’t look cool anymore. Do I really need another iPod? While thinking about this $300-$400 addition to my iPod collection, I decided to check out just how portable, portable means.

As I said, the file is a 208MB .m4v file. That is a pretty popular video format, so let’s see what else we can play this video on. I moved the file to a PC and tried to open the file in Windows Media Player. It got the title right, but didn’t have the proper codec for video playback. Interestingly enough, Quicktime and Real did not recognize the file format and various other 3rd party players were more or less successful in recognizing the file, but none would actually play it.

For research purposes only, I did a little Internet search for a codec that would allow me to play this file outside of its native Apple environment. One day after the product was announced, it took about 15 minutes to find. Apple’s digital rights management (DRM) will keep honest people honest, but nothing more. Truthfully, the content is distributed free of charge by the networks, so I don’t think DRM is going to be the major issue for this type of content. But other types of video content will require tighter security. (DRM people, don’t start. No. I don’t think that there is any version of DRM that is actually effective or works – save it for another column)

Will computer distribution eat into DVD sales? Will the unions and guilds get a revenue share of this new income stream? Will consumers really want to take their videos with them? Is iTunes a proper environment to make video choices in? Is $1.99 the right price? Steve Jobs has gone on record several times since the launch and said that video is a learning experience. There certainly is a lot to learn.

The most important aspect of this exercise may be the part of the business model consumers don’t get to see. Apple has, once again, changed the paradigm. There is a new way for content owners to distribute video; and this is really what we will learn here. Just for fun, imagine an Apple Video iPod with wireless connectivity built in. It might be WiFi, EVDO or one of the new Qualcomm MediaFLO chip sets. That would put the interface into your hand with video downloading in the background. I don’t like predictions, but the future of portable video devices is pretty obvious and Apple has an enormous head start.